Pep Guardiola believes that if Manchester City can qualify for the Champions League knockout phase for the first time they could go all the way to the final at Lisbon's Estádio da Luz in May.

The Bayern Munich coach, whose team face City at the Etihad Stadium in Wednesday evening's second match of the phase, pointed to Borussia Dortmund's success in reaching last season's final.

That followed many years of Dortmund failing to emerge from the opening stages. Of City, Guardiola said: "In the last years they have made big steps forward – they won the Premier League, they won titles. This year would be the first time to qualify for the knockout stages. If they get through they will be one of the toughest teams in the next round.

"Like Dortmund last season, it was the first time they qualified [for many seasons]. I have the same feeling it can happen. City are one of the biggest clubs in Europe – they didn't get through in the last two seasons but I am 100% confident they will get through.

"I know some of their players, [David] Silva, [Alvaro] Negredo and Yaya [Touré] – incredible squad, played very well so far. Tomorrow will be a big test for us."

However Arjen Robben, who scored the winner in Bayern's 2-1 Champions League final victory over Dortmund in May, warned that money cannot buy success.

City have benefited from a £1bn-plus investment from Sheikh Mansour, their owner. Yet Robben said: "They are not the only club with a lot of money in Europe but you can't buy quality; I think you have to build a team. Having enough good players will give you a chance of hitting the jackpot at some point. If you look at the last two Champions League seasons, they have had difficult groups but they have the potential to progress well."

Guardiola spent a year on sabbatical following a successful four seasons at Barcelona, which included winning two European Cups, and would not be drawn on City's rumoured interest in him becoming manager towards the end of last season.

"The moment I received a call from Bayern I decided to go there," he said. "I am happy to be at my club. I am lucky guy, I am at one of the best clubs in the world. My desire is to have the best work I can. I did my best in Barcelona. I am 42 years old. I don't know what will happen in the future but I want to stay in Bayern as long as possible."

In response to the PSG striker Zlatan Ibrahimovic's claim that Guardiola did not tell him straight that Lionel Messi would take his place at Barça, the Spaniard said: "This is not the time or place to discuss that. I might talk about it in the future but not today."